4Q FY2017 Results Presentation 5 February 2018 IR Adviser 4QFY17 - - PowerPoint PPT Presentation

IR Adviser

4Q FY2017 Results Presentation

5 February 2018

4QFY17 OPERATIONS REVIEW

55.5% RM58.6m 4QFY17

RM105.7m

Exports 53.6% Exports +21.0% yoy

3

4QFY17 CORE REVENUE (YOY CHANGE) Group 4QFY17 revenue significantly higher on stronger domestic and export sales as well as new contribution from the Myanmar plant…

4QFY17 total exports leaped 21.0% yoy on new contributions of RM8.5 mil from the Myanmar plant 4QFY16

RM90.4m

46 43 38 38 42 40 43 42 43 40 46 47 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17

Quarterly Domestic Revenue (RM ‘mil) 4QFY17 domestic sales rose 12.2% due to stronger demand from F&B customers Domestic RM47.0m 44.5% +12.2% yoy Domestic 46.4%

41 47 48 45 48 57 51 48 51 47 49 50 6.5 8.5 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17

Quarterly Export Revenue (RM ‘mil)

Myanmar plant Exports (excl. Myanmar plant)

1.8 1.6 28.6% 19.3% 3Q17 4Q17

Quarterly PBT & PBT Margin Myanmar Plant (RM ‘mil)

PBT PBT Margin 4

DAIBOCHI MYANMAR UPDATE Daibochi Myanmar 4QFY17 revenue significantly higher on commencement of first export sales… 5-year income tax waiver commenced in November 2017

4QFY17 PBT dipped 11.5% qoq due to higher key raw materials cost and increased operating costs to expedite delivery of new export orders; margins also saw compression from increased sales to cost-sensitive customers 4QFY17 revenue from the Myanmar plant rose 31.3% qoq on first export sales in December 2017, and increased demand within Myanmar

6.5 8.5 3Q17 4Q17

Quarterly Revenue Myanmar Plant (RM ‘mil)

Approval to export outside Myanmar

Received approval from the Myanmar Investment Commission (MIC) on 8 December 2017 to export goods outside of Myanmar Delivered seven containers of flexible packaging to eight cost-sensitive customers in Malaysia in December 2017

Commenced 5-year income tax waiver

Received notification from MIC

• n

the commencement of 5-year income tax waiver from 22 November 2017

+31.3%

• 11.5%

GROWTH STRATEGIES

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GROWTH STRATEGIES Malaysia plant to maintain strong growth momentum through new export contracts… Daibochi Myanmar targets to enter into qualification with MNCs

Eyeing exports to regional markets Secured a contract with a MNC customer in 1QFY18 to supply flexible packaging to the Australia and New Zealand region for its FMCG brand Delivery expected to commence in 2QFY18 Working towards commencement

• f

flexible packaging supply to another two MNCs for their F&B and FMCG brands in Indonesia CAPEX Investing RM10.5 mil in FY18 for new machinery comprising: Printing machine, high-speed slitter, and supporting machinery

MALAYSIA PLANT MYANMAR PLANT

Targeting new business from Myanmar and South East Asia (SEA) Targets to enter into qualification with MNCs to serve their expanding packaging requirements in the high-growth SEA region To leverage low-cost and geographical advantage to secure export contracts from cost-sensitive customers in the SEA region Aiming to reach RM100 mil revenue in FY19 CAPEX Planned CAPEX of USD1.7 mil in FY18 comprising: Printing machine, extrusion machine, slitting and rewinding machine

4QFY17 FINANCIAL REVIEW

INCOME STATEMENT Group revenue and profitability continued quarter-on-quarter expansion… targeting to deliver strong growth in FY18

RM'mil 4Q17 to 31.12.17 3Q17 to 30.09.17 % chg qoq FY17 to 31.12.17 FY16 to 31.12.16 % chg yoy Revenue 105.66 102.03 3.6% 388.65 371.16 4.7% EBITDA 14.81 14.67 0.9% 51.38 45.27 13.5% Operating Profit 11.29 11.19 0.9% 37.60 32.61 15.3% Share of Associate Results 0.78 0.06 1218.6% 1.16 0.09 1183.3% Profit Before Tax 11.17 10.48 6.6% 35.74 29.95 19.3% Net Profit to Shareholders 7.93 7.22 9.9% 25.96 24.52 5.9% Basic EPS (sen)* 2.42 2.20 10.0% 7.92 7.49 5.7% EBITDA margin 14.0% 14.4% (0.4 pt) 13.2% 12.2% 1.0 pt PBT margin 10.6% 10.3% 0.3 pt 9.2% 8.1% 1.1 pt Net margin 7.5% 7.1% 0.4 pt 6.7% 6.6% 0.1 pt

*Adjusted to reflect the bonus issue of 2 for every 10 ordinary shares held by the entitled shareholders, completed on June 28, 2017

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FY17 Review (yoy comparison) Revenue increased

• n

new contributions from Daibochi Myanmar since 3Q17 PBT rose

• n

new contributions from Daibochi Myanmar as well as better sales mix, and progress in efforts to reduce wastage and improve operating efficiency at the Malaysia plant Net profit rose in line with higher PBT; partially offset by higher effective tax rate on lower reinvestment allowances EBITDA margins expanded due to similar factors that drove PBT higher

50 100 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17

Quarterly Revenue (RM ‘m)

5 10 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17

Quarterly PATMI (RM ‘m)

10 20 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17

Quarterly PBT (RM ‘m)

BALANCE SHEET Net gearing significantly reduced from 3QFY17 level… continues to sustain double-digit returns

* The Group carried RM35.1 mil in intangible assets associated with the acquisition of its 60% interest in Daibochi Myanmar **Based on net profit for the trailing twelve months

9 As at 31.12.2017 As at 31.12.2016 (Unaudited) (Audited) Fixed Assets (excl associate investment & deferred tax) 173.31 141.22 Due to recognition of RM35.1 million in intangible assets* Associate Investment 19.36 20.25 Current Assets 173.33 146.81 Due to increase in inventories, and trade and other receivables Current Liabilities 110.42 92.44 Due to increase in borrowings, and trade and other payables Shareholders’ Equity 200.88 189.17 Due to issue of bonus shares and warrants Total Borrowings 69.87 53.99 Due to Daibochi Myanmar acquisition and increased working capital requirements Cash & Bank Balances 18.31 15.83 Due to higher operating cash flow Net Gearing 0.26 x 0.20 x Net gearing significantly lower than 0.38x in 3QFY17 Return on Average Shareholders’ Equity** 13.3% 13.2% Return on Average Total Assets** 7.7% 8.1% Remarks

DIVIDENDS Fourth interim single-tier dividend of 1.3 sen per share payable on 21 March 2018 (ex-date

• n 27 February 2018)…

4.52 4.90 4.52 4.55 FY14 FY15 FY16 FY17 14.8 16.0 14.8 14.9 62% 60% 60% 62% FY14 FY15 FY16 FY17 Total Dividend Payout Ratio^

Payment History Dividend Payout RM’m Dividend Per Share* sen Dividend policy revised to pay out at least 60% of net profit attributable to shareholders, excluding net profit contributions from Daibochi Myanmar

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FY2016 FY2017 FY2016 FY2017 1st Interim (single tier) 1.21* 1.10* 3.95 3.61 2nd Interim (single tier) 1.11* 1.00 3.62 3.28 3rd interim (single tier) 1.10* 1.15 3.59 3.76 4th interim (single tier) 1.10* 1.30 3.60 4.30 Total 4.52 4.55 14.76 14.94 Dividend per share (sen) Dividend Payout (RM 'm)

*Adjusted to reflect the bonus issue of 2 for every 10 ordinary shares held by the entitled shareholders, which was completed on June 28, 2017 ^Excludes net profit contribution from Daibochi Myanmar

INVESTMENT MERITS

VALUATIONS AND MERITS (as at 26 January 2018) Led by innovation and efficiency… a market leader in supplying top quality consumer flexible packaging to MNCs in the region

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MNCs make up almost 80% of total revenue

(benefitting from steady and large orders, strong creditworthiness)

Exports to SEA & ANZ exceed 50% of revenue Supplier to renowned F&B and FMCG brands

(supporting highly-resilient sectors)

Contribution from Myanmar to see earnings boost

Industry-leading R&D and product innovation Highly-experienced management team KEY MERITS

15.3x 4.4x 2.0%

Price Market Cap P/E (ttm) EV/EBITDA (ttm) FY17 Div. Yield P/B

RM2.24 RM733m 28.2x

Contact Information

Investor Relations Low Jin Wei, Executive Director Daibochi Plastic and Packaging Industry Berhad +606-231 9779 jinwei@daibochi.com Julia Pong, Manager Aquilas Advisory (M) Sdn Bhd +6012-390 9258 julia@aquilas.com.my

APPENDIX

CORPORATE PROFILE

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OVERVIEW Leading consumer flexible packaging player in Malaysia and South East Asia with 45-year track record… serving leading MNC brands in the F&B and FMCG sectors

Daibochi established since 1972

A leading provider of consumer flexible packaging to major international brands in the F&B and FMCG industries

Focused on quality and innovation

Experienced R&D team supported by well-equipped laboratory testing facilities

Increasing exports prowess

Growing exports across South East Asia, Australia and New Zealand markets; exports make up >50% of group revenue

Daibochi’s Malaysia plant certifications

Attained ISO:9001 and ISO:14001 certifications Hazard Analysis Critical Control Points (HACCP) compliant to ensure adherence to food safety requirements Obtained Food Safety System Certification (FSSC:22000)

Daibochi’s Myanmar plant certifications

Secured the ISO 9001:2015 accreditation and the HACCP FSMS certification in October 2017

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PRODUCTION FACILITIES Internationally-certified production facilities that comply with all factory audits by MNC clientele… strength in innovation

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PRODUCTION FACILITIES (CONT’D) Strategically located production facilities… sizable floor space allows Daibochi to cater for increasing orders from MNCs

Daibochi Plastic Plant 1

Located in Ayer Keroh, Melaka, Malaysia Production floor space of 385,000 sq ft

Daibochi Plastic Plant 2

Located in Jasin, Melaka, Malaysia Commenced operations in 2Q14 Production floor space of 135,000 sq ft

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PRODUCTION FACILITIES (CONT’D) Addition of Myanmar operations since July 2017 represents the Group’s first expansion of its manufacturing facilities outside of Malaysia…

Yangon, Myanmar Plant

Daibochi and Myanmar Smart Pack Industrial Company Limited (MSP) incorporated Daibochi Myanmar MSP is a leading flexible consumer packaging manufacturer in Myanmar focusing on Home Personal Care products Consumer packaging plant located 30 minutes from Yangon, with built-up of 6,000 sq m and land area of 36,000 sq m Quick Facts on Myanmar

Population of >50 mil Low flexible packaging consumption of <USD1 per capita (Indonesia USD13, Vietnam USD9, India <USD5)1

1PCI Wood Mackenzie, 2015

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OPERATIONAL SYNERGIES Leveraging strengths & synergies to accelerate expansion in high-growth markets…

WIDER PRODUCT RANGE

• Daibochi Myanmar to

benefit from technology transfer from Daibochi Malaysia (CPP & metalliser)

• Daibochi Malaysia to

fulfil product line gap in the interim

• Expand F&B

packaging line leveraging on Daibochi Malaysia’s strengths and long-term relationships with MNCs

SIGNIFICANT LOW-COST ADVANTAGE

• Capitalise on

low manufacturing cost advantage to export to cost-sensitive customers in SEA

• Benefit from bulk

purchases of raw materials (e.g. resin)

• Enjoy cost savings

from production of in- house film

HUMAN CAPITAL DEVELOPMENT

• Access to ample

workforce pool;

• pportunities for

skillset upgrading and

• ptimisation
• To tap into Daibochi’s

R&D and specialty films, develop sales team, & enhance production efficiency

• To attain international

certifications in food safety, quality & environment management

STRONG CASHFLOW & DIVIDENDS

• Able to fund future

growth, without requiring additional capital injection from shareholders

• Targeting dividend

payment from Year 3

• nwards
• 5-year tax exempt

status

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PRODUCTION PROCESS Integrated end-to-end packaging process… equipped with specialized in-house capabilities

Prepress Cylinder Making Gravure Printing Lamination (Extrusion / Dry) Slitting / Bagging

CPP Film Metallizer

Up to 9-colour 2-sided printing In-house capabilities Solvent-based/free Capabilities incl Standing Pouch

The only player with in-house cylinder-making, and one of the few with metallizing and sealing films capabilities for quality assurance and constant improvement at key stages

To build high barriers Polypropylene sealing films

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PRODUCT APPLICATIONS Wide range of packaging solutions for various product functions… constantly innovating for changing requirements

Film Type Applications / Use High Permeability Barrier / Performance Coffee, Nuts, Potato Chips Cost Effective Barrier Snacks, Biscuits, Wafer, Chocolate, Cakes General Packaging Outer Pack, Noodles, Biscuits, Wafers Specialty Application Labelling, Retort Packaging, Ice-cream, Frozen Food, Cereal Peel Seal, Seasoning Oil, Powder/Liquid Detergent, Shower Foam, Tobacco, Pet food

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REGIONAL PRESENCE Commendable track record in serving a wide number of MNC clientele in the F&B industry with stringent quality control…

Supplier to leading global brands

The Largest Supplier of Milo packaging in S.E.A The Sole Supplier to Nestle’s Chembong confectionery factory in Malaysia Daibochi is also the ONLY S.E.A company on Nestle’s Regional Food Safety Committee Supplier

• f

>90%

• f

Cadbury’s flexible packaging in Malaysia The Major Supplier of Mondelez International’s (formerly known as Kraft) biscuits and snacks packaging in Malaysia Major Supplier of flexible packaging to PepsiCo’s Chiang Mai plant for potato chips manufacturing

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INDUSTRIES SERVED Diversified clientele of leading brands across various industries…

Food Beverage FMCG Specialty

• Confectionary
• Biscuits
• Snack Foods
• Dairy
• Frozen Food
• Cereal
• Shampoo
• Detergent
• Personal Care
• Sanitary
• Coffee/Tea
• Dairy
• Soft Drink
• Tobacco
• Medical Packaging
• ESD / Anti-Static
• Pet Food

Worldwide consumer flexible packaging market worth $92 bil in 2015

Estimated to grow 4% p.a. to reach $114 bil in 2020 Growth to be led by Asia Pacific & other emerging regions (e.g. South & Central America)

Growth catalysts for Asia’s flexible packaging market

Higher demand for cheaper and smaller pack sizes in line with affordability of general population (especially post economic slowdown) Increase in working mothers / dual-income households leading to preference for convenience packaging Development of multinational food retailers and manufacturers in the region; indicating the long-term growth potential in Asia

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INDUSTRY INSIGHT Growth in flexible packaging to be led by the Asian region… penetration into new product categories to bring next wave

Source: Smithers’ Pira – The Global Flexible Packaging Market – Trends and Forecasts Source: The Asia Pacific Flexible Packaging Market to 2016 by PCI Consulting Films Ltd

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CORPORATE INFORMATION Market cap of more than RM700 million…

DAIBOCHI PLASTIC & PACKAGING INDUSTRY BERHAD

Exchange Main Market, Bursa Malaysia since 1990 (transferred from Second Board in 2003) Sector Industrial Products Codes Bursa: 8125 / DAIBOCI Bloomberg: DPP:MK Reuters: DPPM.KL Share Capital RM164.2 mil (327.3 mil shares) Market Capitalization RM733.1 mil (RM2.24 as at 26 January 2018)

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MANAGEMENT TEAM Experienced management with industry expertise…

Thomas Lim Soo Koon, Managing Director

Holds a degree in Bachelor of Science Industrial Engineering and Management from Oklahoma State University, & Master of Business Administration degree from Oklahoma State University. Joined Daibochi in 1995, and was appointed as Managing Director in February 2005. Played a key role in building Group’s MNC clientele.

Low Jin Wei, Executive Director

Holds a degree in Bachelor of Commerce (Major in Finance & Marketing) from University of Sydney, NSW, Australia. Prior to this, Mr. Low was the Managing Director / Project Director of GlassKote (Malaysia) Sdn Bhd from 2005 to September 2010.

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MAJOR SHAREHOLDERS Institutional investors holding approximately 33%...

• No. of shares (‘mil)

(31.12.2017)

Percentage Low Chan Tian 33.8 10.3% Apollo Asia Fund Ltd 30.7 9.4% Lim Koy Peng 27.7 8.5% Halley Sicav – Halley Asian Prosperity 19.3 5.9% Datuk Wira Wong Soon Lim 19.1 5.8%